This under-the-radar growth stock has thrashed Just Eat plc

Credit manager Arrow Global Growth(LSE: ARW) has enjoyed a blistering year, its share price rising more than 70% in the past 12 months. The company is well named, given this trajectory. The stock is up another 7% today, as its latest set of results hit the target once again.

Bullseye!

Arrow Global, which has a market cap of £819m, is one of the UK's largest buyers of consumer and SME debt, purchasing both secured and unsecured non-performing debt portfolios across the UK and mainland Europe. Today's results for the six months to 30 June show the group fizzing along, with organic portfolio purchases up 30.3% to £125.1m, and revenue growth of 47.6%. It recently completed the acquisition of Zenith Service in Italy and agreed terms to acquire Mars Capital, expanding its UK secured servicing capabilities and entering the Irish market.

The Manchester-based firm has been supported by an 11.3% increase in core collections and an impressive 98.6% increase in asset management incomeyear-on-year. Overall collections performance stands at 103% of original underwriting forecasts, showing the quality of the group's data and analytics. It has also boosted the value of its back book by investing further in legal collection costs.

Hitting the mark

Underlying profit after tax rose 35.5% to £25.8m, with basic earnings per share (EPS) rising 35.8% to 14.8p. However, statutory profit after tax dipped from £16.5m to £3.7m year-on-year, primarily due to post-tax costs associated with its £22.1m refinancing in March. Group chief executive Lee Rochford hailed another period of strong, profitable growth. "Our returns-focused mindset continues to yield results with underlying return on equity increased to 32.8%. We are pleased to announce an interim dividend of 3.2p, up 18.5%."

Arrow looks an attractive growth prospect, especially given its undemanding forward valuation of 13.6 times earnings. Its forecast yield of 2.5% is good when you take into account recent share price growth, and management policy is progressive. With dividend cover of 2.9, there is scope for plenty more double-digit hikes, generating further shareholder rewards. City analysts are pencilling in earnings per share (EPS) growth of 27% both in 2017 and 2018. Today's update will reassure them that Arrow should continue to fly.

Take a bite

Online takeaway marketplace Just Eat(LSE: JE) has also hit the spot lately, its share price up 18% in the past six months, and 150% over three years. It now has more than 30,000 restaurants on its books and serves more than 14m customers, but there is little sign that its market is saturated. Just East operates in 13 countries and can always keep the profits flowing by moving into new territories.

Some have warned the trend towards healthier eating could hit the takeaway market but this doesn't worry me, as a new generation of fast-food operators explores healthier options. Just Eat will inevitably slow from 2014's heyday, when EPS growth hit a stunning 200%. City analysts forecast it will slow to 'just' 38% in 2017, and 37% in 2018. If that puts you off, you are fussier about your food than I am.

Just Eat's current valuation looks high at 97.7 times earnings but is forecast to fall to 27.6 in 2018 as the revenues keep flowing. My takeaway? Arrow Global and Just Eat both hit the spot.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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